The Northern Inyo Hospital District board met Wednesday evening to discuss the FY 2020-2021 budget. The board continues to work through financial difficulties borne of Covid impacts and the Flanigan era. NIHD’s net revenue is forecast to drop another 13% year-over-year in 2020-2021, from $84 million to $73 million.
This would be a second consecutive 13% drop. From 2018-2019 to 2019-2020, it dropped from $97 million to $84 million.
For FY 2019-2020, the Hospital was approximately $4.2 million in the red.
In FY 2020-2021, the Hospital is expected to operate at a $10 million net loss.
Which is a little scary when your cash on hand at the end of FY 2019-2020 is projected to be $5.6 million.
The silver lining: Various relief funds, including PPP loans, are expected to largely cushion the blow.
And in recognition of what’s happening at the hospital financially, Chief Medical Officer Will Timbers foresees $1 million in savings from renegotiation of provider contracts.
This only makes sense as Financial Consultant Vinay Behl projects a 25% decrease in surgeries performed at NIH in 2020-2021 as well as a 25% decrease in in-patient days.
NIH’s bond rating, adds Behl, has been downgraded to a B+ (sub-investment grade) with a negative outlook.
Behl praised Interim CEO Kelli Davis and urged the board to delay its CEO search for at least a year. He said making a change right now may prove counterproductive. “I cannot stress enough how dedicated and diligent your management staff is,” he said.
Long time IT czar Bryan Harper added on the Zoom chat in affirmation, “Kelli is one of the best executives I have had the chance to work with in 25 years.” Several other meeting participants agreed with his assessment.
Which, directly or indirectly, throws a little shade at recently ousted CEO Dr. Kevin S. Flanigan.
And there was a KSF on the call, so … perhaps he was listening in.
One of the things that Behl mentioned offhandedly in his presentation was that even in a very good year (2018-2019), the hospital district essentially broke even.
Which suggests, on some level, that Dr. Flanigan was at minimum, unrealistic in his approach to fiscal management.
It doesn’t rain every year.
The Sheet has made, at this point, at least a score of public records requests from NIHD in an effort to better understand why the Board may have parted ways with him in May.
And what we discovered is that Flanigan was certainly generous towards providers (doctors).
Which is also a wonderful way to assure a CEO of retaining a base of support.
A few examples (and not to pick on these providers, but these were the providers most vocal in their support of Flanigan, so we couldn’t help wondering why).
*Note: This is not a reflection on the quality of the providers. They’re probably great. And I don’t blame them for their fondness towards Dr. Flanigan. After all, when someone showers us with attention and affection and dollars, it’s hard not to think well of someone for recognizing our genius.
**I also add as a caveat that these contracts aren’t exactly easy to understand. I tried to reduce them to apples-to-apples comparisons.
A first example. Dr. Charlotte Helvie.
Pre-Flanigan, she made $162,000 in base compensation, working six, four-hour shifts per week. She also received a $1,500/month stipend to serve as the liaison between Bishop Pediatrics and NIH.
Flanigan negotiated her next contract in 2017. This contract required Dr. Helvie to work the same hours, 78, four-hour shifts per quarter.
Her base compensation was bumped to $220,000. She also received a $32,000 annual fee for a “medical directorship” of pediatrics. I assume this was meant to replace the $1,500/month stipend.
In her latest renewal (2019-2020), her hours were reduced to 58 four-hour shifts per quarter or 920 hours/year.
Additional four-hour shifts would be compensated at $600.
Her base compensation was reduced to $185,000 annually with the medical directorship adding an extra $50,000.
So say she worked 78-hour shifts like she did in 2017. She’d make $185,000 plus $48,000 in 80 shifts above her negotiated 58 per quarter plus the directorship = $283,000, or a 12% bump above 2017.
There was also a provision in her contract for an “efficiency bonus” if she could see/process a certain number of clients per hour. The Sheet has asked for (but has not yet received) financial documentation to reveal what that bonus may yield.
Another example: Dr. Stacey Brown.
It appears his compensation for 2017-2018 was $220,000 base plus $32,000 for a medical directorship based upon approximately 1,500 hours worked that fiscal year.
By 2019-2020, the contract called for a $253,000 base plus $50,000 for his upgrade to “lead physician.” The contract called for 1,265 hours of work for the year, with any additional hours compensated at $200/hour.
The contract also included a provision for productivity/quality bonuses.
But generous contracts aside, this may not have gotten Flanigan in trouble with his Board. Talent costs money. We all know that. A CEO could probably justify those contracts. One may not agree, but the argument can be made.
But what Flanigan probably could not justify to his Board was exceeding his spending limit on several occasions to bail out Pioneer Home Health (PHH) throughout 2018 and 2019.
Several transfers were authorized by Flanigan and made to PHH without seeking Board approval.
$100,000 in December, 2018
$80,000 in February, 2019
An unspecified amount transferred in April, 2019
$80,000 in July, 2019
$50,000 in August, 2019
$60,000 in October, 2019
$50,000 in November, 2019.
Flanigan’s spending limit, per district policy, was $40,000.
While one can certainly argue the merits of saving PHH, the NIH Board likely didn’t realize just what shape PHH was in, or what kind of financial liability it was taking on when it spent $300,000 in 2018 to essentially acquire PHH by becoming its sole corporate board member.
Would you spend $300,000 to acquire a business that was apparently losing $500,000/year?
Further, given PHH’s precarious financial health, would you reward PHH Administrator Pat West post-acquisition by agreeing to pay her $189,000/year?
The Sheet obtained that email, which included Flanigan’s offer, along with West’s startled reply. “If you are serious, I have no questions or concerns,” replied West.
The Sheet sent a follow-up email (see below) to West.
“I noted one email where Dr. Flanigan discussed your new, proposed salary based upon 28 years experience.
Did PHH have a retirement plan? Is it part of an NIH plan? Does any one-year salary have an effect on what retirement compensation might look like? Or was the salary you received during the last few years before your retirement basically compensation in and of itself based upon comparative salaries elsewhere with no long-term implications related to District obligations?
Another question: There were several payments NIH made to PHH in 2018 and 2019 to keep it solvent.
Which makes me interested to hear your take regarding the home healthcare industry in general.
Obviously, the service PHH provides is extremely important to the community. Question is, can that service be provided at a net zero? Or is PHH destined to run deficits based upon the economics of reimbursements and patients’ ability to pay?
Were the payments NIH made to keep PHH in business a temporary phenomenon, or a preview of coming attractions?”
We did not receive a reply.
Onto other matters …
Mammoth Lakes Tourism has demanded a retraction and apology from me for what it perceives as a stark transgression.
A few weeks back, I wrote a piece regarding some Food Bank P.R. that MLT claims was “free.”
Further, MLT says I didn’t include within the story the full contents of the email I sent to the writer of the Food Bank P.R. (which they maintain was an unpaid news story) – proof of my duplicity.
The author, Madeleine Barber of TTG Media, at the prompting of Emma Westman of Black Diamond Travel, Marketing and Data, writes, “The feature I wrote about Mammoth Lakes Tourism’s food bank is editorial coverage and was in no way paid for by Black Diamond or Mammoth Lakes Tourism.”
“I agree that this type of journalism is unacceptable … “ she added.
The type of journalism she’s referring is my inquiry as to how much it costs to hire Maddy Barber to write a story. And I said in my email that I was inquiring on behalf of restaurateurs.
Which, yes, is a stretch of the truth, but I had to figure out the nature of what I was dealing with.
And I did speak to more than a few restaurateurs who felt the ink might be better spilt on fawning profiles of those who pay TBID versus those who collect and spend it.
It wasn’t entirely the truth. It wasn’t entirely a lie.
And I imagine if Maddy Barber worked for the Associated Press, she wouldn’t have written back so eagerly quoting me a price of $2,500.
And as I said two weeks ago, if MLT is paying Black Diamond more than $60,000/year for p.r. work, it’s essentially paying for whatever “free” p.r. Black Diamond arranges.
I call semantics and bullshit.
As Bloomberg reported last year, the ratio of p.r. people to journalists is now more than 6-to-1.
Just twenty years ago, that ratio was 2-to-1.
I am positive that self-interested marketers won’t be satisfied until that ratio is infinity-to-zero.